Vertex Scores A Big Win With Its Cystic Fibrosis Experiment

In a development that greatly bolsters its standing in the cystic fibrosis market, Vertex Pharmaceuticals late yesterday released data showing a combination of its existing Kalydeco treatment and an experimental medication called VX-661 greatly improved patient breathing. Specifically, lung functioning rose 9 percent and 7.5 percent in the two highest dose groups compared with a placebo over 28 days (read more here).

The Phase II trial was crucial because Vertex has wanted to find a way to treat different subset of cystic fibrosis patients with various genetic mutations, in this instance, a mutation called F508del that is also the most common. Kalydeco was approved for treating a less common mutation called G551D, which accounts for just 4 percent of cystic fibrosis patients (see this). So by indicating its combination treatment could successfully improve lung functioning, Vertex scored a big win.

As a result, analysts are quickly increasing their outlook for the biotech. For instance, Robyn Karnauskas of
Deutsche Bank says the results greatly bolster the likelihood that Vertex will be able to treat most patients with the F508del mutation. Moreover, she adds, the results “increase the market size opportunity for (treating) other mutations,” as well, she wrote in an investor note.

The data is “unambiguous and supports the company’s expansion in the largest subgroup of cystic fibrosis patients,” write Raymond Baird analyst Brian Skorney in his note. “We believe the most important takeaway from this new data is the consistent lung function benefit from the combination of a corrector and potentiator (different types of treatments) across several different studies.”

Given that Vertex has little competition in the hard-to-treat cystic fibrosis market – unlike hepatitis C, where its initial success with its Incivek treatment has since been overshadowed by rival meds – analysts are raising their revenue forecasts. Alan Carr of Needham & Co. for instance, foresees $4 billion in annual revenue potential for Vertex in the cystic fibrosis market. Vertex, by the way, estimates there are about 30,000 patients worldwide with the mutation, which represents about half of the global pool of people with cystic fibrosis.

Karnauskas adds that "we think that data available so far on Vertex drugs is truly suggesting that the company has a cystic fibrosis franchise technology. Given (recent) comments from FDA (made during a webinar), we believe that the agency might be lenient towards Vertex drugs in smaller genotypes as the drug & technology seem to be effective and safe in larger genotypes. If these results continue to hold, we could potentially see an expedited path for less represented cystic fibrosis genotypes."

I've followed the pharmaceutical industry since 1995. This ride began at The Star-Ledger of New Jersey and continues with Pharmalot, which I have run since 2007. Along the way, I was also an editor at The Pink Sheet. Before covering pharma, I worked for several years at New ...